Your 1031 DST Authority
Passco Riverside DST
Offering Overview
A 265-unit, 11.68-acre Class A apartment community (Velo Riverside, 1181 Manhattan Blvd.) completed in 2024, sited on the Northern Kentucky riverfront in Dayton, KY (Campbell County) directly across the Ohio River from downtown Cincinnati within the Cincinnati OH-KY-IN MSA. The mix is weighted to one-bedroom (~39% of units) and two-bedroom (~46%) product at a 1,042 SF blended average across four residential buildings with structured/garage parking. The thesis monetizes cross-river cost arbitrage—CBD employer access (Procter & Gamble 4.1 mi, Kroger 4.4 mi) and the CVG/DHL/Amazon Air logistics cluster 17 mi south—against a lower Kentucky tax basis, layered onto a forecast 2026 contraction in submarket deliveries. The asset-specific operating plan targets occupancy normalization from the 91.69% in-place rent roll toward a modeled 94.24%, executed through revenue-management pricing (YieldStar / Passco Pricing Model), an ancillary-income ramp (valet trash, utility reimbursement, parking, pet revenue), and light amenity capex under an affiliate master lease with Arlington Properties as third-party manager. Capitalized at 45.49% loan-to-cost on fixed-rate Fannie Mae DUS debt across a 10-year hold.
Investment Highlights
- The submarket is transitioning through a supply-absorption inflection that underpins the rent thesis. Trailing deliveries ran hot—roughly 3,200 units, up ~44% versus the recent average—and supply outpaced demand over the prior twelve months, but Kentucky alone captured more than one-third of market-wide net absorption, and deliveries are slated for a notable pullback in 2026 that supports vacancy stabilization. The asset enters this window already constructed and amenitized, positioning it to absorb residual demand without competing against a fresh wave of lease-up concessions from later-cycle starts.
- The location exploits a structural cross-river labor and cost arbitrage. The Kentucky riverfront delivers downtown-Cincinnati employment access while sitting on a lower Kentucky tax basis, and the property manager reports a median resident household income near $97,656 with approximately 53.30% of units occupied by households earning above $90,000. That income profile implies a meaningful rent-to-income cushion relative to in-place rents, supporting renewal pricing power and reducing collection-loss sensitivity through a softening labor cycle.
- Demand drivers are diversified across non-correlated employment verticals within the commute shed rather than concentrated in a single industry. The CVG aviation/logistics hub (DHL's primary U.S. international gateway undergoing a $292M expansion; Amazon Air's 800,000 SF facility), aerospace via GE Aerospace, and a deep healthcare/education base (the sector is the MSA's largest employment concentration at 15.8%) are reinforced by announced expansions including Medpace's $327M tower (~1,500 jobs) and Resilience's biomanufacturing build-out. This breadth dampens idiosyncratic tenant-demand risk across the hold.
- The capital structure is conservatively levered and rate-insulated. The Fannie Mae DUS facility carries a fixed 4.85% coupon bought down for $816,020, with a 7-year interest-only runway before 30-year amortization, on a nonrecourse basis at 45.49% loan-to-cost. The resulting 2.16x Year 1 DSCR and an ascending coverage profile through the I/O window provide substantial debt-service headroom, while loan assumability (subject to lender approval and a 1% fee) furnishes financing optionality that can widen the buyer pool at disposition in a higher-rate exit environment.
- The asset benefits from a property-tax abatement structure in which fee title is held by the City of Dayton under Taxable Industrial Building Revenue Bonds (Series 2022), with PILOT-style payments calibrated to what the taxing jurisdictions would otherwise receive. This vehicle supports interim net operating income during the early hold and is a structural enhancement not present in comparably situated unabated assets, even as the projections conservatively model a reassessment to 100% of purchase price beginning in 2027.
Forecasted Cash Flow
Projected annual cash-on-cash distributions with the corresponding tax-equivalent yield over the hold, based on the sponsor’s underwriting assumptions.
Illustrative projections only — targeted distributions are not guaranteed and actual results will vary. Tax-equivalent yield assumes depreciation shelter of distributed income.
Analyst Notes
On a risk-adjusted basis the offering reads as an income-oriented core-plus DST whose return is bond-like through the interest-only window and increasingly amortization-driven thereafter, with a mid-4% going-in cash yield on moderate fixed-rate leverage. Feasibility of the underwriting rests on three contingencies: occupancy normalizing above the current rent roll despite recent submarket oversupply; percentage-rent escalation actually materializing through revenue-management execution; and the truss remediation plus 2027 reassessment not impairing modeled NOI. The negative basis to appraisal and the ~15.31% equity load mean realized appreciation must first absorb the syndication load before investor equity is preserved at a Code Section 1031-qualifying exit - placing weight on the forecast 2026 supply pullback and the diversified employment base that anchor the demand thesis. The distribution path (4.35% rising to 4.89%, then resetting to 4.30% as principal amortization begins) is most sensitive to the thinly capitalized master tenant's coverage, which is the structural fulcrum of the cash-flow projection.
Pros
The offering pairs a 2024-vintage, fully amenitized institutional asset—minimizing near-term deferred maintenance and functional-obsolescence exposure—with a conservatively structured balance sheet. Fixed-rate DUS leverage at 45.49% loan-to-cost insulates cash flow from rate volatility through a 7-year interest-only window, producing a 2.16x Year 1 DSCR that ascends to the low-2.30x range before amortization commences. Demand fundamentals are supported by a diversified MSA employment base spanning logistics, aerospace, and healthcare/education, a high-income in-place resident profile, a forecast 2026 contraction in competing deliveries, and identifiable operational upside through revenue-management pricing and ancillary-income capture. The PILOT abatement supports interim NOI, and the assumable nonrecourse loan enhances exit flexibility.
Cons
The diligence record discloses a roof-truss / snow-load design deficiency: the Curtainwall Design & Consulting report (Oct. 8, 2025) documents trusses deflecting beyond design and bearing on walls not intended to carry those loads, addressed through ad hoc bracing, gusset plates, and Simpson truss screws, with no confirmed comprehensive truss-by-truss remediation plan—latent structural-capital exposure atypical for a 2024 build. Going-in basis is unfavorable: the October 6, 2025 as-is appraised value of $77,100,000 sits below the $78,566,250 real-estate allocation and well under the $89,701,000 total capitalization, embedding a negative basis versus appraisal and an implied loan-to-appraised-value of ~52.9% against the stated 45.49% loan-to-cost. Year 1 underwriting assumes 94.24% occupancy above the 91.69% in-place rent roll, into a submarket where deliveries recently outpaced absorption (3,200 units, +44%; 7.5% metro vacancy) and five comparable communities within 5.3 miles report occupancy spanning 89.5%-97.1%. The master tenant (Passco Riverside MT, LLC) is newly formed with limited capital and net worth, carries thin modeled net income (~$112,062 in Year 1), and depends on a percentage-rent mechanism (80% of EGR growth over an escalating base, re-adjusted in Year 8) to fund distributions—a master-tenant capitalization weakness. A 2027 reassessment to full purchase price drives a ~48.3% real-estate-tax step-up in Year 3 that suppresses NOI growth, and amortization onset in Year 8 cuts the net investor distribution to 4.30%.
Financing
Financing terms for this offering are summarized below.
Benchmark Comparison
| Metric | This Offering | Benchmark | Difference |
|---|---|---|---|
| Average Yield | 4.55% | 5.03% | −9.54% |
| Max Yield | 4.89% | 5.29% | −7.56% |
| 10-Yr Income Growth | 12.41% | 24.74% | −49.84% |
Benchmark reflects the average of comparable Multifamily offerings. Differences are relative to the benchmark.
Offering Documents
Offering Documents Available By Request
About the Sponsor
Passco Companies is an Irvine multifamily and commercial sponsor, founded in 1998, whose founder Bill Passo helped pioneer the modern tenant-in-common 1031 structure that preceded the DST—giving the firm genuine standing in the history of securitized exchanges. With $4.1 billion in AUM as of late 2025 and more than $8 billion in lifetime acquisitions across multiple cycles, Passco concentrates on Class A multifamily in Southeastern and secondary/tertiary markets, owning or managing some 30,000 units. Its structural heritage and through-cycle acquisition record make it a seasoned, large-scale name in the category.
This page describes a specific Delaware Statutory Trust offering (Passco Riverside DST) and is provided for informational purposes only. It does not constitute an offer to sell or a solicitation of an offer to buy any security. Any offering is made solely to verified accredited investors and only by means of a confidential private placement memorandum (PPM).
All figures shown — including minimum investment, cash-flow projections, tax-equivalent yield, loan-to-value, and hold period — reflect the sponsor's current estimates and assumptions and are not guarantees of future performance. Tax-equivalent yield depends on each investor's tax circumstances; projected distributions may not be achieved and actual results will vary. Sponsor track record, benchmark data, and full-cycle averages describe prior programs and are not indicative of the results of this offering.
An investment in a DST is speculative, illiquid, and involves a high degree of risk, including the possible loss of the entire amount invested. There is no public market for these interests, distributions are not guaranteed, and investors have no control over property operations. 1031 exchange and tax treatment depend on each investor's individual circumstances and on tax laws that are subject to change; consult your own tax and legal advisors.
Tax-equivalent yield represents the pre-tax yield a fully taxable investment would need to generate in order to match the after-tax cash flow of this offering. It assumes that a portion of distributions is sheltered by depreciation and other deductions, and it depends entirely on each investor's individual tax bracket, state of residence, and holding structure. It is illustrative only and is not a projection of return. Cap rate equivalent is the implied capitalization rate (net operating income divided by purchase price) shown solely for comparison to direct real estate; it is not a distribution rate, a yield, or a measure of investor return.
This offering and all terms shown are subject to change, withdrawal, or cancellation at any time without notice, and availability is not guaranteed. Nothing on this page creates a commitment or reservation. An investment is confirmed only upon the sponsor's acceptance of fully executed subscription documents; no other communication, indication of interest, or reservation constitutes a binding investment.